Analysts forecast increase in remittances to Nigeria

Analysts at Lagos-based FBN Quest have predicted an increase in the value of remittances to Nigeria. The firm stated this in a report obtained by newsmen.

The Central Bank of Nigeria’s (CBN) balance-of-payments data for the third quarter 2017 showed a continuation of the upward trend in workers’ remittances/transfers since the foreign exchange reforms earlier this year.

But FBNquest “suspects that the principal drivers of remittances through recorded channels are the ease and cost of transactions.”

The World Bank had indicated that transfer costs to sub-Saharan Africa were among the most expensive in the world, at an average 9.1 per cent of the transaction. These costs had spawned the emergence of digital transfer operators in competition with the traditional players in the field.

“The latest annual total (of $19.5 billion in 2016) can surely be bettered when we allow for the size of the Nigerian Diaspora, estimated at up to 18 million people,” the report added.

Continuing, the report stated: “Remittances of $5.71 billion in the third quarter 2017 were the highest since the fourth quarter of 2010 ($5.75 billion).We expect a decent increase for the current quarter, which generally sees the largest inflow of the year due to the holiday season.”

According to the report, the receiving institutions in Nigeria are not required to document the purpose of remittances.

However, one London-based transfer company had estimated that 80 per cent of the transactions it handles were for family support. The federal government had raised $300 million from the sale of Diaspora bonds in the first quarter of 2017.

Meanwhile, a separate report by the firm has stated that from the balance of payments (BoP) for third quarter 2017, the current-account surplus widened from the equivalent of 1.4 per cent of Gross Domestic Product (GDP) in the second quarter to 2.4 per cent.

Merchandise exports had increased by 10.8 per cent on the quarter, while imports declined by -8.4 per cent as Nigeria emerged slowly from recession. The 11.7 per cent share of oil and gas exports in GDP was the highest since Q3 2014.